CHICAGO (Reuters) - When Janice Barnwell decided to boost her career by obtaining a master's degree in business, the working mother chose an online university because of the convenience and the low cost.
The 44-year-old's educational experience exceeded her expectations, and her new employer paid for her to take four more courses online to sharpen her skills.
"At first I was very intimidated (by taking classes remotely). It's something I've never done," said Barnwell, who works as a wealth management liaison. "But it quickly changed for me because the interaction I had online with my classmates and professors felt real."
The online education sector grew 13 percent last year and had been growing at about 20 percent in previous years. Nearly one in four students take at least some college courses online, up from one in 10 in 2002. Two million students, most older than the traditional 18-22 year-old undergraduates, take all their courses online and two million more take one or more online course.
President Barack Obama pledged $500 million for online courses and materials as part of a multi-pronged plan aimed at expanding access to college.
Twenty-nine percent of U.S. adults have a college degree, fewer than in many other industrialized nations. Only about 40 percent of Americans who start college graduate. The price of higher education, which rises by an average of 8 percent a year, contributes to the high dropout rate.
"All along that education pipeline, too many people ... are slipping through the cracks. It's not only heartbreaking for those students; it's a loss for our economy and our country," Obama said in a recent speech.
Jeff Conlon, chief executive of Kaplan Higher Education with some 59,000 online students, said traditional colleges could not meet Obama's goals for higher education.
"Obama wants to make us first again by 2020," he said.
"In order to do that, we need to create 63 million college graduates over that period. The higher education system as constructed will come up 16 million degrees short. There's not capacity in the system."
Proponents of online education cite a recent Department of Education study that concluded course work is better absorbed online than material presented in live classrooms.
Among the heavily marketed for-profit online educators, the leader is the University of Phoenix, a unit of Apollo Group Inc, whose enrollment rose 22 percent to 420,700 students in the quarter ending May 31, with revenues rising 26 percent.
Both Kaplan, a unit of Washington Post Co, and Phoenix are accredited universities. Employers increasingly see degrees earned online as equal to those received from brick-and-mortar schools, experts say. Some managers believe students who earn degrees online while also holding a job are likely to exhibit more self-discipline and determination.
Richard Garrett of Boston consultant Eduventures Inc. said interest in online education may have plateaued for now, awaiting innovations that will transform the experience beyond screen imitations of the brick-and-mortar curriculum.
"We're still at a pretty rudimentary stage," Garrett said, noting educators rarely employ video, unique links, or other technological innovations.
"Will it be games? Will it be simulations? Will it be social networking? Will it be something we haven't yet come across?" he said.
No one has yet figured out how nursing students can practice drawing blood online, Conlon said. But there have been enhancements such as virtual laboratories where budding chemists can conduct experiments that might be too dangerous or too costly in the real world.
Most online course offerings tend toward vocational subjects like business, legal and health care training. Students needing hands-on experience go to Kaplan's campuses or its partners.
Most Kaplan classes are capped at 25 students because faculty can be subjected to communication overload. Students who might have been intimidated to speak up in classrooms often find their voice online.
Professors, most with doctorates, are hired for their teaching ability and not for their research, Conlon said.
The cost at Kaplan for a four-year college degree is around $65,000, compared to up to $150,000 or more at a private college. Online library access is provided by the University of Alabama in Huntsville.
By studying online, Barnwell saved on the time and travel to the university nearest her New Jersey home. Online tuition was less than $30,000, one-third the cost of the university.
Roughly half of the 4,500 U.S. brick-and-mortar colleges and universities now have online programs. Some have proven so popular that schools have had to restrict enrollment by on-campus students because they were taking slots away from off-campus students, said Jeff Seaman, who led a survey on the topic for the Sloan Consortium.
Online education is also making inroads in schools, with one million U.S. elementary and high school students, or some 4 percent of the total, learning online.
Some take remedial or advanced placement courses not available at their schools, and some are being home-schooled or live in isolated rural areas.
"You're able to learn at your own pace and you also can have help whenever you need it from the teacher," said Christopher Cox, 12, a child actor in Columbia, Maryland.
Harvard Business School Professor Clayton Christensen predicted half of kindergarten through high school students will attend school online within the next decade.
This worries people like Laurie Fendrich who wrote a response to a Washington Post article on the subject.
"If we want our kids to end up sitting alone in isolated little rooms when they're 18 and 20, staring at computer screens instead of facing other real human beings, thinking in a way that turns thought into nothing but bits of information ... we could insert them into comfortable little cocoons in their homes from the age of, oh, say, seven."
Editing by Alan Elsner